Improved manufacturing and energy costs lifted Gildan Activewear Inc.’s first-quarter profits more than sixfold.
For the three months ended Dec. 31, the Montreal-based apparel vendor said it registered a profit of $28 million, or 23 cents a diluted share, 1 cent above Yahoo Finance’s analyst consensus estimate. Year-ago earnings were $4.4 million, or 4 cents a share. Excluding restructuring charges, the firm said earnings totaled $29.2 million, or 24 cents a diluted share, versus $5.3 million, or 4 cents a share.
Strong sales in activewear and underwear helped quarterly revenue jump 19.8 percent, to $220.4 million from $184 million in the 2008 quarter.
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The company said that quarterly gross margins improved to 29.8 percent of sales versus 21.1 percent, driven by “significant gains in manufacturing efficiencies, lower cotton and energy costs and more favorable activewear product mix.”
According to the Gildan, the strong recovery in sales of activewear and underwear compared to 2008 reflected a 31.5 percent increase in activewear unit sales volumes, due to higher market share in the U.S. distributor channel, lower seasonal inventory destocking by distributors than in the first quarter of fiscal 2008, and increased penetration of international and other screenprint markets.”
On the conference call, executive vice president, chief financial and administrative officer Laurence Sellyn said the industry “may be stabilizing,” and added that the company is positioned to “sustain strong earnings growth in 2010.”
Gildan, which said one of its factories in Haiti suffered significant damage during last month’s earthquake, reconfirmed full-year sales guidance in excess of $1.2 billion, up about 17 percent over fiscal 2009.
Analysts projected sales of $1.23 billion for the year.